TMI Blog2016 (1) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... erein held that the present issue has been decided by the Tribunal against the assessee right from the assessment year 1999–2000 to 2001–02. The Assessing Officer has apportioned indirect expenses which are to be reduced from the profits of the power unit as worked out in detail at Page–20 of the assessment order. This allocation of indirect expenses to arrive at the profit of power unit has been decided by the Tribunal in the earlier years and, therefore, consistent with the view taken therein, we find no reason to disturb the order passed by the learned Commissioner (Appeals) and, accordingly, the same is affirmed on this issue - Decided against assessee Alternative claim of deduction u/s 80IA in respect of integrated power unit in case the claim for deduction for power unit No. 6A & 6B are not allowed - Held that:- This issue has been treated as infructuous by the Tribunal in the earlier years on the ground that it is purely an alternative claim as the claim for deduction u/s 80IA with regard to unit no. 6 has been allowed, therefore, no separate adjudication is required as admitted by the assessee. Accordingly, in this year also this alternative claim of the assessee is tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t:- This issue would be decided against the assessee in view of the decision of Hon’ble Delhi High Court in the case of Goetze India Ltd. [2013 (12) TMI 607 - DELHI HIGH COURT ] wherein Hon’ble High Court has held that disallowance made u/s 14A would be included while computing the book profit. Since we have already confirmed the disallowance of ₹ 50,000/-, therefore, the same shall also be included in the book profit.- Decided against assessee Generation of steam amounts to formation of power or not so as to be eligible for claim of deduction u/s 80IA for Unit No. 6A and 6B - Held that:- The section provides that the assessee must begin to generate power during the period defined under the statue and the impugned assessment year definitely falls within that period. Lastly, insofar as the observation and the conclusion of the Assessing Officer, which are based on similar reasons as given for Unit–1 to 5, the same is also not sustainable as the Tribunal has already decided the issue on these reasoning in favour of the assessee. Thus, we set aside the impugned order passed by the learned Commissioner (Appeals) on this score and hold that the assessee is eligible to claim ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals was not justified in holding that electricity duty should be excluded for calculating Transfer Price of electricity for the purpose of computation of deduction u/s 80-1A. 2. That on the facts and in the circumstances of the case the Ld. CIT(Appeals) was not justified in holding that for computing deduction u/s 80-IA, the prorated indirect expenses of the company should be reduced from the profit of the Power Units. 3. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) ought to have given directions to allow deduction u/s 801A in respect of integrated Power Unit No. 6 if in the unlikely event the claim for deduction u/s 801A in respect of Power Unit No. 6A 6B is ultimately not allowed in favour of the company. B. Disallowance of Employee s Contribution to Provident Fund ESI Fund. 4. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals was not justified and grossly erred in confirming the disallowance of employee s contribution to Provident Fund and EST Fund amounting to ₹ 43,23,169/-made after the due date. C. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the case, the Ld. CIT(Appeals) was not justified and grossly erred in holding that short credit of TDS is not a valid ground of appeal u/s 246A. 2. At the outset, Ld. Counsel for the assessee submitted that most of the grounds raised by the assessee are covered by the decision of Tribunal in assessee s own case right from the assessment year 2002-03 to assessment year 2005-06, except for issue raised in ground no. 4 relating to disallowance of employees contribution to PF, which is covered by the decision of Hon ble Bombay High Court. 3. The Ld. DR has also admitted that most of the grounds raised by the assessee are covered by the order of the Tribunal for the earlier years. 4. The assessee company is engaged in the business of manufacturing of paper and paper boards, optic cables, Jelly field cables and power generations for captive consumptions. Most of the issues raised in both the appeals have a chequered history, in as much as they stand decided by the Tribunal in earlier years. 5. So far as the issue raised vide ground no.1, whether electricity duty should be excluded while calculating the transfer price of electricity duty for computing the deduction u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds and services. In the Explanation to section 80IA(8), the market value has been defined as a price that such goods or services would ordinarily fetch in the open market. Fetching of the price in the open market has to be seen from the factors which are determined through negotiation between the parties and mutual agreement as arrived at a price which is acceptable between the buyer and the seller in the open market conditions i.e., in an unrelated and uncontrolled transactions. Open market conditions refer to the conditions and price available for the public at large. In the present case, the market value of supply of electricity by power unit of the assessee to the paper division of the assessee has to be seen from the angle, if the paper unit has to purchase the electricity directly from the Karnataka Electricity Board (as both the power units as well as the paper units are situated in Karnataka), then what is the price which would be paid by the paper unit to the Karnataka Electricity Board. The transfer of the price as contemplated in section 80IA(8) has to be seen having regard to the arm s length condition i.e., what would be the price under uncontrolled transactions in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of statutory provisions, sans going by any earlier year precedence. Thus, in our opinion, we have to follow the provisions as contained in section 80IA(8) for determining the market price, which cannot be arrived by reducing the price by any other factors like taxes, duties, etc., as the same are embedded in the price. Thus, we set aside the impugned order passed by the learned Commissioner (Appeals) on this issue and allow the ground no.8, is treated as allowed . 7. Thus, respectfully following the precedence of earlier years, we decide this issue in favour of the assessee. 8. In ground no. 2, the assessee has challenged the calculation of deduction u/s 80IA for reducing the pro-rated indirect expenses of the company from the profit of the power units. 9. This issue has been decided against the assessee by the Tribunal in assessee s own case for the earlier years in the following manner:- 34. Ground no.9 reads as under: 9. That on the facts and in the circumstances of the case the Ld. CIT(Appeals) was not justified in holding that for computing deduction u/s 80IA, the prorated indirect expenses of the company should be reduced from the profit of the Power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28,702 18.09.06 September 28,502 18.10.06 October 28,574 16.11.06 November 26,617 19.12.06 December 39,38,314 16.01.07 December 26,403 18.01.07 January 25,043 20.02.07 February 21,620 17.03.07 March 59,492 16.04.07 March 19,576 18.04.07 Total 43,23,169 The AO accordingly, added the same to the total income of the assessee. 15. Before the CIT(A), it was clarified that most of the payments were made within the grace period as prescribed in the relevant statute and in any case all the payments were made much before the due date of filling of the return of income. The Ld. CIT(A) too confirmed the said disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance has been made by the AO and confirmed by the CIT(A) after invoking the formula laid down in 8D, which is not applicable for AY 2007-08. Further, the Tribunal in assessee s own case for the earlier years has clearly held that Rule 8D is not applicable and for the purpose of allocating indirect expenses, a sum of ₹ 50,000/- was considered to be reasonable disallowance on the facts of the case. The relevant observation of the Tribunal in this regard were as under :- 172. After carefully considering the rival submissions, we find that insofar as the disallowance of interest is concerned, the same cannot be made under section 14A, on the facts of the present case. The assessee has, admittedly, huge interest free surplus funds, which is evident from the fact that it has its own funds of ₹ 149.29 crores. Besides this, it also had sum of ₹ 63.20 crores on account of retention of sales tax difference in this year. In view of such huge surplus funds, the investment to the tune of ₹ 49 crores that too major portion is coming from the earlier years, it can be said to be made out of the surplus funds only. Thus, according to the principles laid down by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 50,000/- for this year also, which will include the disallowance already offered by the assessee at ₹ 8,187/-. Thus, ground no. 5 is treated as partly allowed. 21. Ground no. 6 has not been pressed, accordingly, same is treated as dismissed. 22. In ground no. 7, the assessee has challenged the addition of profit on sale of investment and reduction of loss on fixed assets in computing the book profit u/s 115JB. 23. Admittedly, this issue has been decided against the assessee by the Tribunal in the earlier years in the following manner: 232. We have heard the rival contentions and perused the relevant findings of the authorities below. We agree in principle that corresponding adjustment has to be made in the opening stock as held by the Jurisdictional High Court in CIT v/s Mahalaxmi Glass Works Pvt. Ltd., [2009] 318 ITR 116 (Bom.). The finding of fact as recorded by the learned Commissioner (Appeals) that after making the adjustments made by the assessee in the opening stock and purchase and sale, the net effect is nil appears to be based on fact. Thus, we do not find any reason to deviate from such findings of fact which has not been rebutted and, hence, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case and in law, The CIT(A) erred in holding that the provision of section 80L4(3)(ii) are satisfied in respect of DG sets. 1.3 Whether on the facts and in circumstances of the case and in law, the CIT(A) erred in holding that the claim for deduction u/s.801A in respect of Power Unit No.6A and 6B as generation steam is not form of power for deduction. 1.4 Whether on the facts and in circumstances of the case and in law, the CIT(A) erred in holding that the rate as per cost Audit report is justified for adoption of higher transfer pricing rate for claiming deduction u/s.801A. 2. Whether on the facts and in circumstances of the case and in law, The CIT(A) erred in deleting the disallowance of expenses incurred on repairs and maintenance of building amounting to ₹ 18,96,639/-. 3. Whether on the facts and in circumstances of the case and in law, the CIT(A) erred in deleting the addition of unutilized Modvat credit to The value of closing stock of raw material in view of the provisions of Sec. 145A 4. Whether on the facts and in circumstances of the case and in law, the CIT(A) erred denying of deduction u/s.8OHHC in computing book pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n be held that the said undertaking on a standalone basis has been set up for generation of power or not within the meaning of section 80IA(4)(iv). The relevant clause (iv)(a) of section 80IA(4), reads as under: (a) Set up in any part of India for the generation and distribution of power if it begins to generate power at any time during the period beginning on first day of April 1993 and ending on 31st day of March 2006. 21. Thus, the statute contemplates generation of power or generation and distribution of power . The moot question before us is, whether the steam generated by the assessee, which rotates the turbine for running of machines used for its manufacturing process and also steam alone, is a form of power or not. The case of the learned Commissioner (Appeals) is that the meaning of power as contemplated in the statute is generation of electricity alone, whereas the case of the learned counsel before us is that the power is a form of energy which can be electrical, mechanical, thermal or any other form of energy. The Income Tax Act, 1961, does not define the word power . The new Oxford Dictionary of English defines the word power as energy that is produced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is only the electrical form of energy which qualifies for deduction under s. 80-IA, with reference to the provisions of Electricity Act, was not correct. 22. Similarly, in the decision of DCIT v/s Maharaja Shri Umed Mills Ltd., the Tribunal held that like electricity, steam is also a form of power which is eligible for relief under section 80IA(4). The relevant observation and the conclusion drawn by the Tribunal is reproduced below: 5. Considering the above submissions, we find substance in the arguments of the learned Authorised Representative that like electricity, steam is also a form of power as per the dictionary meaning reproduced by the learned CIT(A) at pp. 5 and 5 (sic) of the first appellate order. We also concur with the view of the learned Authorised Representative that there is little room for any doubt that scientifically or in general parlance, production of steam and generation of steam ; or for that matter, production of electricity and generation of electricity , shall have the same meaning whichever of the two be the item under consideration. In this regard the learned Authorised Representative has also referred the definition of word generate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m-power; is a spell of travel by steam power; energy, force, spirit for, using, worked by steam; to rise or pass off in steam or vapour, or smell; to become dimmed with condensed vapour (often with up); to move by means of steam. As per the Cambridge International Dictionary of English, the steam is the hot gas that is produced when water boils; steam can be used to provide power, steam turbines of a steam engine/locomotive of the age of steam. Thus there is no doubt, like electricity, steam is also a form of power. The arguments advanced on behalf of the assessee also find support from the decision of Delhi Bench of the Tribunal in the case of Sial SBEC Bioenergy Ltd. vs. Dy. CIT (supra) on an identical issue wherein dealing with the matter in detail, it has been held that the word power has to be given a meaning which is in common parlance and in common parlance the word power shall mean the energy only. The energy can be of any form, be it mechanical, be it electrical, be it wind or be it thermal. The steam produced by the assessee on the principle of interpretation of statute shall only be termed as power and shall qualify for the benefits available under s. 80-IA(iv), held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, we set aside the impugned order passed by the learned Commissioner (Appeals) on this score and hold that the assessee is eligible to claim deduction under section 80IA with regard to Unit 6 also as a stand alone power generating undertaking. Ground no.5 raised by the assessee is thus treated as allowed . 37. Thus, respectfully following the same, we decided this issue in favour of the assessee and against the revenue. 38. The next issue raised vide ground no. 1.4, whether the rate as per cost Audit report is justified for adoption of higher transfer pricing rate of electricity for claiming deduction u/s 80IA. 39. This issue has been decided in favour of the assessee by the Tribunal in the earlier years, which is also similar to ground raised by the assessee. Accordingly, respectfully following the same, we decide this issue in favour of the assessee and against the revenue. 40. In ground no. 2, the revenue has challenged the allowability of expenses incurred on repair and maintenance of the building. 41. This issue is again covered by the decision of the Tribunal in the earlier years wherein this issue has been decided in the following manner:- 40. Ground n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and against the revenue. 43. In ground no. 3, the revenue has challenged the deletion of addition on account of unutilized Modvat credit to the value of closing stock of raw material in view of provisions of section 145A. 44. This issue is again has been decided in favour of the assessee in the following manner :- 230. Before us, the learned counsel submitted that the Assessing Officer has held that the unutilised MODVAT credit has to be added in the closing stock in view of the provisions of section 145A. the Assessing Officer has increased the value of closing stock, however, he did not make any corresponding adjustment in the opening stock. Before the learned Commissioner (Appeals), it was submitted that in the computation, the assessee has dully made the adjustment in the opening and closing stock and also the other adjustment in purchases and sale. Based on this factum, the learned Commissioner (Appeals) deleted the said addition as the net effect was nil . He also submitted a copy of the Tribunal order in MIRC Ltd., in ITA no.849/Mum./2010, order dated 13th March 2013, in support of his contention. 231. The learned Departmental Representative relied upon the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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